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The market is rigged and here’s how individuals can play it

The Daily Ticker
The Daily Ticker
Daily Ticker

The stock market is rigged and always has been says Heidi Moore, the U.S. economics and finance editor at The Guardian. That's why many investors are staying clear of stocks even though U.S. markets are trading at all-time highs. An April Bankrate.com survey found that 73% of investors are "not more inclined to invest in stocks" -- the third consecutive year of negative investor sentiment.

"Once you wake up to how screwed up the stock market really is, the financial industry knows you're likely to get very nervous and take your money out," Moore writes in a recent column. "It's time to break down the polite fiction that investing in the stock market is something that sane, rational, sensible people do. It is a high-risk contact sport for your money. If you know that, you're ahead of the game."

Moore tells The Daily Ticker that high-frequency trading -- the subject of Michael Lewis' best-selling book "Flash Boys" -- distorts the market and increases the volatility of stocks. HFT pits the retail investor against super charged computers -- a lose, lose situation for everyone but the traders that own and operate these machines, according to Moore.

Related: How to end high frequency trading: Make fast traders pay for each bid or order, says Leigh Drogen

Hope is not completely lost; Moore says last week's Senate hearings on high-frequency trading suggest that Congress may pursue legislation that curbs the advantages these computers have. In the meantime, it's best for investors to have a small footprint in the market, she argues.

"Regular investors should not believe the market is a store of value," she explains. "It's not a bank. It can bring you great returns if you're in something safe like an index fund. Just don't trade stocks day by day."

Related: Growth vs. Value: Has the worm turned?

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